Most people carry debt. The average person has a mortgage, car loan, student loan, and credit card debt. People get so caught up in keeping up with the Joneses that they end up mismanaging their finances.
When shopping for a house, people tend to spend at the top of their budgets. Many feel the need to buy a new car every few years. They put vacations on credit cards and eat out multiple times a week. Enjoyment is an important part of life, but if you’re left with no money at the end of every month, how much of life can you really enjoy?
Getting back on the right financial track may seem insurmountable, but you can do it. Here are some simple steps to help you start paying down your debt.
Figure out how much you owe.
Up until now, you were in denial. You pay the bills as they come in with no real idea about how much you owe to whom. If you want to pay off your debt that needs to stop. Gather up all of your information about credit cards, car loans, student loans, mortgages and whatever else you owe and figure out what the total is. That’s going to be a scary number for most, but being clear about what that number is will let you know about the mountain you are about to climb.
Make a budget.
Many people end up in this situation because they have no idea where their money is going. If you want to pay back your debt you need to account for every dollar you make. Your priorities are to make sure that you have a roof overhead, food in your belly, and keep your utilities on. Figure out what your monthly bills will be for each of these necessities first.
Get rid of the extras.
What are you spending money on right now that you can cut? Do you have cable? Streaming services are much less expensive. Look into signing up for one. If you belong to multiple streaming services figure out which ones you use the most and cut the others.
Shop around for a cell phone plan that best matches your usage rates. Cut down on eating out. Get rid of luxuries that you do not need.
This is a pretty bare-bones approach to living, but you won’t be doing it forever. When you get rid of your consumer debt, you can add luxuries back in. Paying down credits cards, student loans, and car loans are the most important. Once you’ve done that you’ll have extra money to play with and can be more relaxed as you pay down your mortgage.
Start paying down your debt.
Organize your debts from smallest to largest. Pay the smallest one off first. When that bill is gone, you’ll feel an enormous sense of accomplishment, and you’ll have extra money that you paid towards that debt to put into the next one. While you’re concentrating on paying one debt off continue paying minimum payments on the other ones.
Figure out a way to make extra money.
There are a lot of ways to make extra money these days. Maybe you can put in more overtime at work. If that’s not a possibility, there could be something you could do on the side. Driving for companies like Uber or Lyft is a good option.
You could earn money by doing people’s grocery shopping, delivering packages for Amazon, or walking dogs. If you’re good at writing, you could write online content. Try turning a skill that you have into a freelance business. The opportunities are endless. Any extra money you earn doing this work should be used to pay off your debt.
Right now you might look at the amount of money you owe and think this is impossible. You might wonder if you will ever be able to get rid of your debt. You can do it. Many people have. If you have the determination and mindset, you can do just about anything. Reading this article is the first step, now get busy taking the actions you need to get you where you want to be.